Lending to SMEs fell 1.4% in second quarter

BANKS ARE continuing to tighten credit to small and medium-sized enterprises, new figures from the Central Bank of Ireland show.

Lending to SMEs fell again in the second quarter of 2012 by €390 million or 1.4 per cent.

Lending to non-financial, non-property-related SMEs by Irish resident credit institutions declined €1.2 billion, or 4.6 per cent, over the year to the end of June. This follows an annual decline of 6.3 per cent to the end of March 2012.

The amount of credit advanced to non-financial, non-property-related enterprises declined by €530 million, or 1.3 per cent, in the three months to June, while credit to the construction and real estate sectors fell by €1.1 billion over the year, or 1.9 per cent.

Lending to SMEs increased in three non-financial, non-property-related sectors in the second quarter: manufacturing (€18 million); water supply, sewerage, waste management and remediation (€11 million); and education (€3 million).

New lending, which excludes lending related to restructuring or renegotiation of existing facilities, came to €459 million during the second quarter.

In total, Irish financial institutions had €213.6 billion in outstanding loans to Irish private-sector enterprises at the end of June, with more than half accounted for by the financial intermediation sector. This was down 3 per cent, or €3 billion, on the previous year.

Irish businesses increased their deposits in Irish banks during the second quarter by 0.8 per cent, or €623 million. Deposits held by non-financial businesses rose 0.7 per cent on the previous quarter to €35.4 billion. The overall level of deposits fell 1.41 per cent from June 2011 to June 2012.

A total of €459 million was drawn down relating to new loans to SMEs in the non-property, non-financial sectors during the second quarter of 2012.